2 Incredibly Popular Stocks to Sell Before They Plummet 54% to 74% in 2026, According to Select Wall Street Analysts | The Motley Fool

The S&P 500 ( ^GSPC 0.02%) is set to close out 2025 on a high note. The widely followed stock index sits near its all-time high after a strong bull run that's lasted over three years. Technology stocks have been the driving force behind the index's climb, fueled by big tech's heavy spending on new artificial Intelligence (AI) data centers and investor optimism about the potential for AI to boost earnings potential. But some of the biggest companies leading the stock market higher may have gotten ahead of themselves. Investors are paying a premium price based on unreasonable expectations for sales and earnings growth, even as AI spending continues to soar. As a result, some Wall Street analysts see significant downside in a lot of the bull run's biggest winners. Two incredibly popular stocks are worth highlighting. Palantir Technologies ( PLTR 2.43%): RBC Capital has a $50 price target, representing downside of 74% from the stock price as of this writing. CoreWeave ( CRWV 2.73%): DA Davidson has a $36 price target, representing downside of 54% from the stock price as of this writing. Here's why the analysts are so bearish on these popular stocks and why readers may want to avoid them. Image source: Getty Images. 1. Palantir: The fast-growing AI software giant Palantir helps businesses make sense of all the data they collect and generate. With the growing amount of data generated in everyday businesses, the total addressable market for Palantir is huge. And it took a major step toward capturing that potential market in 2023 with the launch of its Artificial Intelligence Platform (AIP). AIP allows Palantir users to take advantage of large language model capabilities. It enables them to interact with their data and Palantir's models using natural language. That significantly lowers the technical expertise required to get the most out of the software and expands its use cases across enterprises. Management points to AIP as the reason for its accelerating revenue growth and profitability. NASDAQ: PLTR Key Data Points Last quarter, Palantir produced revenue growth of 63%, with U.S. commercial revenue climbing 121%. As it scales, Palantir is exhibiting significant operating leverage. Adjusted operating margin for the quarter came in at 51%. That gives Palantir a Rule of 40 score (revenue growth plus operating margin) of 114. The rule suggests any number above 40 is considered worthy of investment. To be sure, Palantir is exhibiting extremely impressive growth, indicating there's a big addressable market its capturing. But investors don't just want to buy great companies; they want to pay a fair price. It's hard to argue Palantir's current stock price is fair value. Its forward P/E ratio of 268 and price-to-sales ratio exceeding 100 are both astronomically expensive. The market is pricing Palantir as if revenue will accelerate forever. RBC Capital's analysts warn that multi-year U.S. commercial contracts may be pulling forward demand. So, a drop in revenue growth wouldn't be all too surprising in the near future. 2. CoreWeave: The cloud infrastructure company winning...

Preview: ~500 words